Why Now is the Best Time to Update Your Contracts Management Processes
In today’s modern business landscape, contract management has adopted a pivotal role in governing relationships and ensuring compliance, productivity, timelines, and deliverables are efficient and profitable. In order to maximize strategy, minimize administrative work, and ensure agreements are handled at an optimal level, it’s imperative for businesses to have a thorough understanding of the contract management process.
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Contractual Challenges in the Era of COVID-19
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With the spread of the coronavirus, came a whirlwind of unanticipated implications for businesses. Along with the economic disruption, actions taken by the CDC and governing bodies to mitigate the spread of the virus led to mandatory business shutdowns, border closings, social distancing and quarantine protocols, and travel restrictions. The unexpected interruption of normal business operations has left companies concerned over their ability to satisfy contractual obligations.
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With both buyers and sellers facing the ramifications of COVID-19, it’s imperative for businesses to analyze their contract inventory and begin identifying potential risks and ways in which they can be mitigated. Contractual relationships with suppliers, insurers, customers, contractors, and employees will require an extensive review.
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Everything from force majeure obligations and insurance provisions to deliverables and applicable laws will need to be evaluated. This process is incredibly important from both a short and long-term perspective. In order to properly set expectations and ensure positive outcomes, businesses need to understand where they may be vulnerable to costly litigation or payout risks.
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Risk Mitigation via Contract Management Consulting
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To reduce losses, ensure continuity, and protect one’s organization, many businesses are opting to leverage contract management services. Through the use of a contracts management consultant, companies can lean on a team of knowledgeable experts to manage their contracts through every stage of its lifecycle.
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Approaching contract management from this angle will ensure you’re establishing the right framework and developing an effective contract management plan – all while providing the tools and guidance necessary to navigate high-value or high-risk contracts. In response to mitigating COVID-19-related impacts, a contracts management team will help facilitate the following:
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Determine Which Contracts Are Impacted
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Identifying high-risk areas, such as agreements held with direct suppliers, allows businesses to assess their ability to mitigate supply risk by altering suppliers. Establishing secondary supplier relationships in an agile manner will help minimize service disruption and optimize business continuity.
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Proactively Address Relevant Provisions
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Since each organization will have its own unique provisions based on their industry, contracts, and relationships, it’s important for companies to have a clear understanding of what their provisions entail. Force majeure, which can account for unforeseen circumstances, may be applicable when it comes to the fulfillment of contractual obligations due to COVID-19.
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Identify the Enforceability of Various Clauses
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Any clause related to an organization’s inability to satisfy contractual obligations should be examined within the context of the coronavirus. This process may require the review of applicable governing laws and notice requirements that must be adhered to.
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Build an Action Plan & Renegotiate Terms
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Based on the results of the review, a contracts management consulting service will create a strategic plan of action to protect business interests and minimize risk. Some of the avenues they will explore are renegotiating contract terms, termination (where legally allowed), and executing a strategy to meet current and future demands. This includes forecasting and helping organizations understand potential costs associated with navigating this tumultuous landscape.
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Through these procedures, businesses will be able to implement long-term planning that accounts for the disruption caused by COVID-19. Now, more than ever, it’s important for organizations to allocate their resources towards addressing current contract management complexities and making adequate preparations for the future.
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How can we help? The team at Concannon Business Consulting has a wide range of experience and proficiencies in managing and negotiating business contracts. Contact us for more information about our contract management services!
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